Microsoft kills volume licensing for low-end Windows<br>

Microsoft has ended volume licensing for Windows 95, 98 and Millennium Edition operating systems, with effect from next year.

Citing "a steady decline in demand from business customers," Duncan Reid, product marketing services manager at Microsoft, said the company has removed the products from their volume price list. The changes are effective worldwide, he said. Volume pricing significantly reduces the per seat costs of Microsoft operating systems for businesses with large numbers of users. But Microsoft's complex pricing systems make it impossible to estimate accurately how much more they will have to pay. Dan Kusnetzky, vice president of system software research at IDC, said: "This will push a significant cost burden onto business. But it's fairly unlikely that people will bolt [to alternative operating systems such as Linux]." He estimated the average cost per seat for Windows 2000 would be around $100 higher than Windows 9x, with additional costs for more expensive hardware. This is widely seen as the first step in the company's plan to resurrect revenues and boost demand for Windows 2000. Though designed for the consumer market, the Windows 9x systems are widely used by businesses reluctant to upgrade a system that still works. But no upgrading means no new revenues for Microsoft. "It seems pretty obvious that they are looking to accelerate the adoption of Windows 2000 Professional edition with this move," said Kusnetzky. The move was announced a day after Microsoft issued its first ever profit warning. Though forecasts for Fiscal 2001 were only five to six per cent down, Microsoft shares fell out of bed amid heavy trading on Friday morning, finishing at $49.19, down from Thursday's $55.50 close. This follows lukewarm demand from businesses for Windows 2000 Professional and Server editions. Ashim Pal, programme director international of web and collaboration services at Meta Group, told silicon.com last week that only around 20 per cent of the firm's clients had implemented Windows 2000 thus far. However, IDC found the rate of 2000 adoption was increasing, accounting for 40 per cent of shipments of Windows NT Workstation and Windows 2000 Professional systems by year end. "It's ahead of our forecasts," said IDC's Kusnetzky, "But our initial forecasts were very conservative."